The success of Bahlsen in France Best in France Case Study December 2005 By: Ms. Gounou Ehssane & Ms. Grassl Stephanie

Executive Overview I. History & Business II. Products & Clients III. Coming to France IV. Company values & French culture V. Constraints in France VI. Adaptation to France VII. Key success factors Recommendations VIII. Recommendations

I. History & Business

History 1889: Hermann Bahlsen starts his own ‘biscuiterie’ in Germany  Creation of new products & umbrella brands 1960: First sales offices in France & Italy 1994: Merger with ‘biscuits St Michel’  Bahlsen St Michel SAS  Two family companies  Through this acquisition the mother company Bahlsen extends its portfolio

Bahlsen St Michel 2005 Part of the group Bahlsen Germany employees -542 million euros of sales -Exports to more than 80 countries -Presence in Europe, North America & Asia Bahlsen St Michel France: -124 million euros of sales -476 employees  France is an important location (second headquarter)

France Headquarter: Rueil Malmaison St Michel: Production of St Michel cookies Commercy: Production of patisserie

II. Products & Clients

Products Distinction between brand St Michel and Bahlsen St Michel Produced in France Bahlsen Produced elsewhere

Products Product lines are hardly being discontinued  innovated all the time in order to exploit the product lines to maximum level. Innovation: -Remarkable -Variation of tastes and forms -Adapt to new tastes of the consumers Innovation product Bahlsen  Done in Europe France has little influence on them Innovation of brand St Michel  Done in France

Location choice Reason for location choice: - Resources - Capacity - Cost But for the Brand St Michel the location choice was different : - M ore historical than strategically - St Michel is a ‘specialité Française’ In France maximum production capacity has been reached!

Bahlsen in Europe

Clients Distribution channels There are two circuits: –GMS (grandes et moyennes surfaces) 80% –CHD (consommation hors domicile) 20% Products sold in all big supermarkets  good reference French customers know –97% St Michel –91% Bahlsen Brands are perceived independent Big change to transform St Michel into Bahlsen –But must that be the task?

Positioning  Publicity more for Bahlsen then for St Michel 2 brands in one company  2 different marketing departments  2 different directors  2 different teams Positioning of products is different, because : -Different segments -Different price & consummation pattern -Different image

Differences St Michel Traditional (100 years) Already loyal consumers Family product ‘Specialité Française’ Bahlsen Modern Innovative Younger people

French presence is important in order to get closer to the consumers !

III. Coming to France

Why coming to France Bahlsen already exported to 74 countries in 1956 They wanted to open up the French market 1960  Bahlsen in France No fast penetration of the market 1994  Acquisition of St Michel Complementarity:  Products ‘sucrés et salés’  Direct contact with customer

With the sales realised in France, it is profitable to be in France costs are relatively low

IV. Company values & French culture

Company values I No real problems when Bahlsen came to France concerning the cultural values BUT Problems occurred when buying St.Michel.  St.Michel had to change its point of view: - Former company with small structure -Family business -Reporting -Acceptance of being in a big company -Not only decision maker -Less autonomy

Company values II The key values are: -Quality -Informing the consumer -Health issues -Regular quality controls Bahlsen succeeded because: –Business structure & culture –“Informal behavior” –Exchanges in R&D  This lead to an approach of the companies  but the transition took time –New ways of communication with headquarter

V. Constraints in France  Not as many differences between Germany and France legal or fiscal  EU  Production cost  Only RH costs which may concern in the future Differences concerning French labor law - 35 hour work - long-term constraints of firing personnel

VI. Adaptations undertaken No dramatic changes undertaken European ‘culture’ Having to report French working culture International orientation: –No international recruiting (depends more on the individual profile) –Bahlsen France is more « French » –Former international trainee programs but too costly  now there is only the reporting and the product exchange

Adaptations undertaken No much integration of French managers in the international organization. Not many exchanges in the management: it depends on the department, for ex. many engineers exchanges Key constraint costs: Higher RH costs No real communication constraints

VII. Key Success Factors High quality of products due to many standards: –Strict selection of ingredients  Instead: natural, healthy ingredients for products –Then there is the European regulations: certification IFS (international food standard) and ISO Innovation Big stabile market with stable and high sales Central location in France The high quality of life The “savoir-faire“ & the tradition Qualified labor market Political stability

VII. Key Success factors Informal culture ( Mr. Bahlsen) Reporting  you feel protected because you belong to a big group However: Future investments in Europe are not sure  but at least feeling that Bahlsen is attached to its employees

VIII. Recommendations Before coming to France: Having right portfolio of products for that country Being close to your customers Good reference EU Motivation Analyse before implementing Adaptions while in France Keep the spirit of ‘family company’ Innovation of products Quality  ‘savoir-faire’

VIII. Recommendations Choose right distribution channels  negotiation power Acknowledge differences between certain brands and position them differently Do not want to copy Bahslen Germany in France Keep your own identity Do not impose too much from the headquarters Look at the needs of local customers Future Investments Economies of scale Exchange in skills Be careful with employees when making tough decisions

Do not be afraid of differences

We Thank Valerie Sajot, Human Ressources Development 22-24, rue Victorien Sardou Rueil-Malmaison Telephone: Melanie Andre Human Ressources 22-24, rue Victorien Sardou Rueil-Malmaison Telephone:

Bibliography Presentation Bahlsen France The Global Challenge; Evans, Pucik, Barsouk Questionnairy Best in France

Our Team Gounou Ehssane - Current address: K038, 1, rue de la Libération Jouy-en-Josas, France - Permanent address : Verdistraat 256, 5343VM Oss, The Netherlands Grassl Stephanie - Current address: K040, 1, rue de la Libération Jouy-en-Josas, France - Permanent address: Esterbergstr.39, München, Germany